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What you should know about employing people in...Switzerland

The law of the country in which the employee usually works generally governs the employment contract.

1. Laws applicable to foreign nationalsHowever, the parties are free to choose the law of either the employee’s ordinary residence or the employer’s establishment, domicile or residence.

Some of the Swiss labour laws form part of the Swiss public order laws and therefore apply despite a choice of law, if the employee’s place of work is in Switzerland. They include regulations on work safety, working hours, rest periods and health protection under the Labour Act and gender non-discrimination. A number of additional regulations apply to expatriates working in Switzerland, such as minimum holiday entitlement, maternity rights and deductible expenses.

The Agreement on the Free Movement of Persons between Switzerland and the EU (Agreement on the Free Movement of Persons) has been in force since 1 June 2002. It provides that EU and EFTA citizens have the unconditional right to work in Switzerland.

Employees who work for less than three months in Switzerland only need to notify the labour and immigration authorities. For longer working periods, EU and EFTA citizens require a residence and work permit but the Agreement on the Free Movement of Persons has substantially simplified this process.

2. Terms of EmploymentGenerally, an employment contract need not be in writing. However, certain contract clauses are only valid if they are in writing and signed by both parties (for example, post-contractual non-competition clauses (restrictive covenants).

If an employee enters into an employment contract for more than one month (or for an unlimited period of time) the employer must inform the employee in writing of the:

Collective agreements between unions and either employers’ organizations or individual employers are common in the following industries: Hotels and restaurants; electrical and metalworking; chemical and pharmaceutical; textile; construction; manufacturing and commercial (in various areas).

Employment must comply with an applicable collective agreement’s mandatory terms, unless it is in the employees’ interest to accept different terms.

3. Minimum WageSwiss law does not provide for minimum wages. However, since 1 June 2004, following the introduction of the Agreement on the Free Movement of Persons, statutory provisions have been introduced that allow for the creation of administrative bodies and measures to prevent wage dumping (preventing employers disregarding the usual and customary wages paid in an industry).

4. Working hours and holiday entitlementThe Labour Act and its regulations provide a complex system of yearly, monthly, weekly and seasonal working hours including night and day regimes. The system depends to a great extent on the particular industry (such as manufacturing, services, farming, healthcare, education, hotels and so on). The weekly maximum working hours usually vary between 45 and 50 hours. Collective agreements can also provide for maximum working hours.

Full-time employees are entitled to a minimum of four paid weeks’ holiday a year. Employees under the age of 20 are entitled to a minimum of five paid weeks’ holiday a year. Collective agreements may provide for more holidays. Expatriates receive the same rights to holiday benefits as those granted to employees domiciled in Switzerland

Public holidays are in addition to the minimum holiday entitlement.

5. Sickness and Sick PayEmployees are entitled to sick pay of at least 80% of their daily salary from their employer if they have been employed for more than three months or they have been employed under a temporary work contract for a term of more than three months. Time off is paid for a period of three weeks, in the first year of employment, increasing thereafter according to the number of years of employment and particular circumstances.

A pregnant employee who takes time off is treated, for these purposes, in the same way as an injured or sick employee. The employer cannot recover these payments from the state. In practice, Swiss employers usually take out insurance to provide the sick employee with 80% or more of the insured salary for 720 days. The insurance payments replace salary payments.

6. Discrimination and harassmentEmployees have the right to equal gender treatment, including equal pay (Gender Equality Act). Any form of direct or indirect gender-based discrimination is prohibited. Court remedies for discrimination include: a court order prohibiting imminent discriminatory actions or requiring the employer to remove the effects of existing discrimination. Compensation is available in cases of non-hiring or dismissal by reason of discrimination.

The law on unfair dismissal only protects victims of non-gender related discrimination.

Protection against harassment is part of the employer’s duty to protect the employee. The employee can apply for a declaratory judgment or for a court order prohibiting imminent harassment.

7. Termination of employment

7.1. DismissalDuring the probation period, which cannot exceed three months, statutory notice period is one week. Thereafter, the notice period depends on the length of employment: one month in the first year of employment; two months in the second to ninth year; and three months from the tenth year. Shorter or longer notice periods can be agreed in writing, but can only be reduced to less than one month in a collective bargaining agreement or in the first year of employment. Notice periods must be equally long for both the employer and the employee.

A dismissal for cause may justify not giving notice. A dismissal for cause can include an employee committing a crime at work or breaching contractual duties in spite of the employer issuing several warnings.

Notice does not necessarily have to be given in writing, unless the employment contract or other binding provisions provide otherwise.

7.2. Unfair dismissalUnfair dismissals are known as ‘Abusive dismissals’. Dismissals may be considered ‘abusive’ for a variety of reasons, and will include situations where the dismissal was for a reason which could constitute discrimination, or where an employee is dismissed because he or she has exercised a constitutional right (for example, a dismissal for the employee’s union activities).

It will also be unfair if made because the employee is performing compulsory Swiss military service, civil defence service or any other compulsory statutory duty.

A mass dismissal is deemed to take place when notices of dismissal are given within a period of 30 days that are for reasons unrelated to the individual employees and affect about 10% of the employees. An employer that plans a mass dismissal must consult with the employees’ representative body (or, in the absence of a representative body, the employees). The employer must allow discussions on how to avoid dismissals, limit their number and alleviate their consequences.

As a minimum requirement, employees must be informed of the reasons for the mass dismissal, the, number of employees to be dismissed and the number of employees usually employed.

The employer must notify the local cantonal labour office in writing of every planned mass dismissal and send a copy of that notification to the employees’ representative body or the employees, where relevant. The notifications must include the results of the consultation and all relevant information on the planned mass dismissal.

After notification, there is limited consultation with the cantonal labour office, during which the office can make its own proposals on how to avoid dismissals or to alleviate the consequences of dismissals.

8. Transfer of undertakings

8.1. ConsultationIf an employer transfers a business unit in an asset deal, it must provide the employees’ representative body (or the individual employees) timely information on the transfer and its legal, economic and social consequences for the employees. If employers breach their duty to consult, the employees can bring an action to obtain a judgment temporarily banning the transfer from being entered on the commercial register. Additional consultation requirements may exist under collective bargaining agreements.

8.2. Automatic transfer of employment contractsIf the employer transfers a business unit in an asset deal, its employment relationships, with all their rights and obligations, are transferred. Employees can decline to be transferred, in which case their contract is dissolved after the statutory term of notice (at the earliest at the date of the transfer). There is no additional protection against dismissal.

9.. Maternity and Parental RightsA female employee must not be employed for eight weeks following birth. During weeks nine to 16 after birth she cannot be employed without her consent. She is entitled to maternity leave of at least 14 weeks after birth.

The employee is entitled to sick pay during pregnancy, at the usual rates, provided the absence is justified by medical reasons. Following the birth, the employee is, under the detailed conditions set out in the Remuneration Compensation Act, entitled to a maternity allowance for 98 days, unless she takes up her employment earlier. This allowance is set at 80% of her daily wages. Any extra days (up to the 16-week limit) are unpaid. The remuneration maternity allowance is paid by state insurance that is financed half by employers and half by employees.

The rules for ordinary sick pay apply to the remuneration of employees who do not meet the maternity allowance conditions

An employee who has passed the probation period cannot be dismissed during pregnancy and for 16 weeks following the birth of her child.

Employees with children under the age of 15, or carers of family members or dependants in need of care, have certain rights. These include a requirement to obtain their consent to overtime, allowing them a lunchtime break of 1.5 hours and fully paid parental leave not exceeding three days to care for a sick child, if they produce a doctor’s certificate.

10. Social security contributionsSwiss employers are fully liable for social security contributions. The social security system only applies to resident employers and non-resident employers that have a permanent establishment in Switzerland.

The employer and the employees usually pay equal contributions. The employer withholds the employee’s share, deducting it from his or her salary. Generally, the rates are based on gross salary. The overall rate is 12.6% (this covers contributions for the risks of age, invalidity, death, military income loss through compulsory military service and unemployment).

11. Data protection rightsThe employer can access and keep employees’ data only if it concerns the employees’ qualification for the job or execution of the employment contract. The processing of data must be effected under the Swiss Data Protection Act, which protects employees’ rights over their personal data and gives legal remedies for misuse. The employer must inform employees before collecting their data (whether through wiretapping, video-taping, surveillance of e-mails or by graphical analysis or otherwise). If the employer collects data without reasonable justification or if it breaches his obligations under the Act, the employee can, among other things, claim compensation.